Portugal vs Italy: Tax Comparison for Entrepreneurs (2026)
Last updated: 2026-03-29
Quick Comparison
| 🇵🇹 Portugal | 🇮🇹 Italy | 🇨🇾 Cyprus | |
|---|---|---|---|
| Corporate tax | 21% | 24% + 3.9% IRAP | 15% |
| Income tax | Up to 48% | Up to 43% | 0% (dividends) |
| Effective rate | ~25-30% | ~7-15% (flat tax) / ~40%+ (standard) | ~5% |
| Dividend tax | 28% | 26% | 0% income tax, 2.65% GHS only |
| Cost of living | Medium | High | Medium |
| EU member | Yes | Yes | Yes |
Interactive Tax Calculator
Countries compared
Portugal
Effective rate
28%
Est. tax: €28,000
Italy
Effective rate
12%
Est. tax: €12,000
Our recommendation
Cyprus (Non-Dom)
At ~5% effective rate, Cyprus saves you more than either country.
Effective rate
5%
Est. tax: €5,000
Annual savings vs Portugal
€23,000
Estimates based on effective rates. Consult a tax advisor for your specific situation.
Portugal vs Italy: Detailed Analysis
Two Mediterranean rivals for expats. Portugal ended its NHR regime in 2024, leaving standard rates up to 48%. Italy still offers its flat tax regime for new residents: EUR 100,000/year regardless of foreign income, extendable up to 15 years. This makes Italy attractive for high earners (those making EUR 500K+ save significantly). For average entrepreneurs earning EUR 100-200K, the EUR 100K flat fee means an effective rate of 50-100%, which is terrible. Portugal now has no special regime at all. Both countries offer Mediterranean lifestyle, EU membership, and cultural richness. Italy has a stronger economy; Portugal has lower cost of living.
Pros and Cons
🇵🇹 Portugal
Pros
- +EU membership and Schengen access
- +Golden Visa program (reformed 2023)
- +High quality of life, mild climate
- +Growing tech and startup ecosystem
Cons
- -NHR regime ended for new applicants (2024)
- -Standard income tax rates up to 48%
- -High social security contributions (~34%)
- -Dividend withholding tax at 28%
🇮🇹 Italy
Pros
- +EUR 100K flat tax for new residents
- +EU membership
- +Mediterranean lifestyle
- +Strong cultural appeal
Cons
- -Flat tax regime only for new residents (15 years max)
- -Standard rates among highest in Europe
- -Complex bureaucracy
- -26% dividend tax under standard regime
Our Verdict
Italy still has its flat tax for new residents (EUR 100K/year). Portugal lost NHR. For standard rates, both are expensive. Cyprus beats both.
The Alternative Most People Miss: Cyprus
Cyprus Non-Dom is the successor to what Portugal NHR used to be, but better. At ~5% effective tax, it is dramatically cheaper than Italy EUR 100K flat fee (which only makes sense above EUR 500K income) and Portugal new standard rates. EU membership, Mediterranean lifestyle, and the 60-day rule make it the obvious choice for entrepreneurs leaving Iberia.
Cyprus Non-Dom: ~5% effective tax
The option most people overlook
- ✓EU member with full Schengen access
- ✓Non-Dom status: 0% tax on dividends (only 2.65% GHS)
- ✓~5% effective tax rate for entrepreneurs
- ✓60-day rule: tax residency with minimal presence
- ✓Mediterranean lifestyle, 340 days of sun
- ✓English widely spoken
Detailed Cyprus comparisons:
Frequently Asked Questions
Is Italy or Portugal better for taxes in 2026?+
Does Italy still have the flat tax for expats?+
What replaced Portugal NHR?+
Sources and References
Tax data: PwC Worldwide Tax Summaries, KPMG Tax Guides (2025/2026), Big Four country guides. Effective rates are approximations for entrepreneur structures (company + low salary + dividends). Consult a tax advisor before making decisions.
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Find Out If Cyprus Is Right for You
Our team helps you evaluate whether Cyprus Non-Dom status fits your situation. No commitment required.